Consumer confidence fell sharply in April, continuing a steady decline that has now stretched to four months.
According to the latest survey from the University of Michigan, overall sentiment dropped 8% from March, hitting its lowest level since July 2022.
The biggest cause for concern wasn’t how people felt about their current financial situation, but their growing fears about the future.
The expectations index, which measures how consumers feel about the economy in the months ahead, plunged dramatically.
Since January, expectations have dropped 32%—the steepest three-month fall since the 1990 recession. Economist Joanne Hsu, who directs the Surveys of Consumers, said the decline is widespread, affecting Americans of all ages, incomes, education levels, and political views.
Hsu explained that many people are worried about several parts of the economy, with trade policy uncertainty and fears of a return of high inflation leading the list.
A major concern is that consumers expect their income growth to slow down in the coming year. Without strong, steady income increases, it will be harder for people to maintain their current levels of spending, which could weaken the economy even further.
Anxieties about trade policy have intensified. About 60% of consumers mentioned tariffs in their interviews this month, compared to 44% in March.
This concern crossed political lines, with Independents and Republicans both citing tariffs as a major issue.
While some welcomed the partial pause on tariff increases announced on April 9, it wasn’t enough to ease most people’s fears about the economic impacts of trade policy changes.
The outlook for the job market has also darkened. Nearly two-thirds of consumers expect unemployment to rise in the next year—more than twice as many as six months ago.
Even more concerning, fewer than half of consumers now believe their incomes will grow over the next year. Meanwhile, 67% of people expect that inflation will outpace any gains they do make, up from 59% last October.
The Consumer Sentiment Index, which reflects overall confidence, fell to 52.2 in April, down from 57.0 in March and far below 77.2 a year ago. The Current Conditions Index dropped to 59.8, and the Expectations Index fell to 47.3, both also significantly lower than last year.
As Hsu emphasized, these findings suggest that unless there is stronger income growth and greater stability in trade policy, consumers’ concerns could continue to weigh heavily on the economy.
